2010-05-05 10:15:00 CEST
2010-05-05 10:15:58 CEST
REGULATED INFORMATION
Sanoma Oyj - Interim report (Q1 and Q3)
Sanoma's Interim Report 1 Jan-31 March 2010: Efficiency Measures Improved the Result
Stock Exchange Release 5/5/2010 11:15
- The Sanoma Group's net sales in the first quarter were in line with the
comparable period, amounting to EUR 637.9 million (2009: EUR 636.0 million).
- Operating profit excluding non-recurring items improved by 53% to EUR 35.6
million (2009: EUR 23.2 million).
- First quarter earnings per share were EUR 0.16 (2009: EUR 0.05).
- Cash flow from operations improved to EUR 38.0 million (2009: EUR -8.5
million). Cash flow per share was EUR 0.23 (2009: EUR -0.05).
- The outlook for the Group is unchanged, but the outlook of the Sanoma Trade
division has weakened.
KEY INDICATORS 1-3/ 1-3/ Change 1-12/
EUR million 2010 2009 % 2009
Net sales 637.9 636.0 0.3 2,767.9
Operating profit excluding non-recurring items 35.6 23.2 53.4 229.5
% of net sales 5.6 3.7 8.3
Operating profit 40.4 20.9 93.2 195.4
Result for the period 24.1 7.7 213.3 107.1
Capital expenditure 16.6 20.2 -17.9 83.4
% of net sales 2.6 3.2 3.0
Equity ratio, % 42.7 40.2 41.4
Net gearing, % 74.4 84.1 79.4
Number of employees at the end of the period (FTE) 16,293 17,845 -8.7 16,723
Average number of employees (FTE) 16,357 17,997 -9.1 17,343
Earnings/share, EUR 0.16 0.05 209.8 0.66
Cash flow from operations/share, EUR 0.23 -0.05 542.7 1.50
Hannu Syrjänen, President and CEO"In the first quarter of 2010, we further improved our efficiency. Operational
improvements helped us to increase our operating profit excluding non-recurring
items significantly. In terms of sales, 2010 has started off fairly slow. In the
first two months we still saw declining advertising markets in most countries.
In March, however, market development was promising, particularly in Finland.
With the low visibility of the advertising markets, it is still too early to say
whether this positive development will continue. It is unlikely that there will
be rapid changes in these markets. Therefore, we will continue to focus on
maintaining a good cash flow and improving our efficiency.
At the same time, we are preparing for the future. Innovative new products and
services, both in print and digital format, as well as new ways of operating are
being developed. To support this, we are building a new innovation management
system.
We want a better balance between our business-to-consumers and
business-to-business revenues in our portfolio. This will mean growing our
learning business, for example. Naturally we will also emphasise our digital
revenues in order to create greater balance with the print revenues. In finding
new sources of online revenue, in-house innovation is a key issue."
Outlook for 2010
Sanoma Group's outlook for 2010 is unchanged. In 2010, Sanoma's net sales are
expected to grow. The operating profit excluding non-recurring items is
estimated to improve slightly. In the comparable year 2009, operating profit
excluding non-recurring items was EUR 229.5 million.
The outlook of Sanoma's net sales and operating profit in 2010 is affected by
the development of advertising and private consumption in the Group's countries
of operation. The current outlook is based on the assumption that the
advertising markets in the Group's operating countries remain stable or grow
only slightly. The efficiency improvements executed in 2009 will continue to
have effects on the Group's results in 2010.
Net sales
In the first quarter of 2010, Sanoma's net sales were at the comparable period's
level and amounted to EUR 637.9 million (2009: EUR 636.0 million). There were no
major changes in the Group structure. Net sales increased slightly in the News,
Entertainment and Trade divisions.
The Group's advertising sales started to show some positive signs in March,
which resulted in advertising sales in the first quarter being in line with the
first quarter of 2009. Advertising sales accounted for 23% (2009: 23%) of
the Group's total net sales. Online advertising sales grew clearly, with Sanoma
Magazines Netherlands, the biggest contributor to online sales, and Sanoma News
both showing clear growth.
The circulation sales were slightly below the comparable period. The Group's
subscription sales remained stable, but single copy sales decreased slightly,
mostly in the Netherlands as well as in Russia and the CEE countries.
Sanoma has a target to double its consumer online sales by 2012. In the first
quarter, such sales grew by 24% to EUR 37.2 million (2009: EUR 30.0 million).
Total digital sales, which also include items such as e-learning and access
services, increased by 7% and amounted to 13% (2009: 12%) of net sales.
By country, Finland accounted for 54% (2009: 53%) of net sales and the
Netherlands 21% (2009: 22%). Net sales from other EU countries totalled 22%
(2009: 21%) and non-EU countries accounted for 3% (4%).
Result
Sanoma's operating profit excluding non-recurring items in January-March
improved by 53% and totalled EUR 35.6 million (2009: EUR 23.2 million). The
result improved in Magazines, News, Entertainment and Learning & Literature.
Operating profit was 5.6% (2009: 3.7%) of net sales. The Group's result
increased in particular due to improved efficiency of operations in all
divisions. Growing advertising sales in Finland in March also improved the
result.
NON-RECURRING ITEMS 1-3/ 1-3/ 1-12/
EUR million 2010 2009 2009
Magazines
Restructuring expenses (Magazines Belgium) -12.4
Restructuring expenses (Magazines Netherlands) -4.7
News
Gain on sale of Lehtikuva 6.0
Expenses related to the efficiency programme -2.3 -8.4
Learning & Literature
Loss on sale of Bertmark Norge -1.2
Restructuring expenses -3.9
Expense related to the sale of children's magazines -1.1
Trade
Restructuring expenses -3.6
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NON-RECURRING ITEMS IN OPERATING PROFIT 4.8 -2.3 -34.1
Impairment losses on loans and other receivables
and available-for-sale investments -8.7
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NON-RECURRING ITEMS IN FINANCIAL ITEMS -8.7
Sanoma initiated numerous efficiency improvement measures and structural changes
in 2009. The effects of these can also be seen in 2010. In the first quarter,
the Group's total expenses decreased by 2%, with employee benefit expenses
decreasing by 4%. Also materials and services, particularly paper costs,
continued to decrease. The Group had 430 employees less than at the year-end
2009, corresponding to a decrease of 3%. From the comparable period, the number
of personnel has decreased by 9%. Sanoma continues to focus on improving its
efficiency and in 2010 is paying special attention to its fixed cost base.
In January-March, the operating profit included a total of EUR 4.8 million
(2009: EUR -2.3 million) in non-recurring items. These non-recurring items were
related to divestments of non-core assets and included both sales gains and
losses. In the comparable period, non-recurring expenses were related to the
efficiency improvement programme of newspaper operations.
Sanoma's net financial items totalled EUR -3.9 million (2009: EUR -10.3
million). Lower reference rates than in the comparable period decreased the
Group's interest expenses. Financial income amounted to EUR 2.2 million
(2009: EUR 6.7 million), of which exchange rate gains were EUR 1.5 million
(2009: EUR 4.2 million). Financial expenses amounted to EUR 6.0 million (2009:
EUR 17.0 million). Interest expenses amounted to EUR 3.1 million (2009: EUR
11.1 million) and exchange rate losses to EUR 2.7 million (2009: EUR 5.1
million). The positive effects of lower interest rates will even out during
2010, since the reference rates came down already in the second quarter of 2009.
The result before taxes was EUR 34.1 million (EUR 10.9 million) and Sanoma's
effective tax rate was 29.3% (2009: 29.6%).
Balance sheet and financial position
At the end of March, Sanoma's consolidated balance sheet totalled EUR 3,137.5
million (2009: EUR 3,215.1 million). Efficient cash flow management continued to
be a focus area and in the first quarter, the Group's cash flow from operations
amounted to EUR 38.0 million (2009: EUR -8.5 million). Cash flow per share was
EUR 0.23 (2009: EUR -0.05). In addition to significantly better operational
result, also lower reference rates and taxes paid improved the cash flow.
Sanoma's financial position continued to be stable during the first quarter.
Sanoma's equity ratio strengthened and was 42.7% (2009: 40.2%) at the end of
March. Equity totalled EUR 1,251.7 million (2009: EUR 1,209.1 million).
Interest-bearing liabilities continued to decrease and totalled EUR 991.4
million (2009: EUR 1,099.4 million) and interest-bearing net debt was EUR 931.3
million (2009: EUR 1,016.5 million). The Group's net debt always increases in
the second quarter when dividends are paid. Sanoma's net debt/EBITDA ratio was
2.4 at the end of March, well in line with the Group's target to keep the ratio
below 3.5.
Investments, acquisitions and divestments
Investments in tangible and intangible assets amounted to EUR 16.6 million
(2009: EUR 20.2 million) in the first quarter. Investments were mainly related
to ICT systems as well as replacements and renovations. Sanoma has a policy to
keep the annual capital expenditure, excluding M&A, below EUR 100 million.
Sanoma's business acquisitions totalled EUR 7.8 million (2009: EUR 4.2 million).
In March, Sanoma News divested its picture agency Lehtikuva to Finnish News
Agency (STT). The purchase price was partly paid by a directed share issue.
Following the transaction, Sanoma News' holding in STT increased from 23.1% to
34.3%.
SANOMA MAGAZINES
Sanoma Magazines, operating in 13 European countries, is a leading publisher of
magazines and has a strong presence in digital media. The company actively
reaches out to an audience of 290 million consumers at every life stage, and
aims to strengthen its market leader positions in each of the markets it
operates in.
- Sanoma Magazines improved its result in the first quarter significantly,
thanks to improved operational efficiency in all businesses.
- Sanoma Magazines outperformed the advertising market development in the
Netherlands and Finland.
- Sanoma Magazines has strengthened its online portfolio in Hungary and the
Netherlands and its online advertising sales in the Netherlands grew clearly in
the first quarter.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2010 2009 % 2009
Net sales 259.9 262.1 -0.8 1,111.2
Sanoma Magazines Netherlands 107.4 110.6 -2.9 493.2
Sanoma Magazines International 48.7 50.9 -4.3 211.3
Sanoma Magazines Belgium 53.5 51.3 4.3 212.3
Sanoma Magazines Finland 51.2 50.3 1.9 198.8
Eliminations -1.0 -1.0 0.6 -4.3
Operating profit excluding non-recurring items * 25.8 15.5 66.0 113.4
% of net sales 9.9 5.9 10.2
Operating profit 25.8 15.5 66.0 96.3
Capital expenditure 4.5 4.6 -1.3 24.4
Number of employees at the end of the period (FTE) 5,117 5,666 -9.7 5,191
Average number of employees (FTE) 5,129 5,713 -10.2 5,452
* In 2010, the operating profit did not include any non-recurring items. In
2009, the non-recurring items included in the second quarter EUR 1.3 million, in
the third quarter EUR 0.2 million, and in the fourth quarter EUR 10.9 million of
Sanoma Magazines Belgium's restructuring expenses and in the third quarter EUR
4.6 million and in the fourth quarter EUR 0.1 million of Sanoma Magazines
Netherlands' restructuring expenses.
Operational indicators * 1-3/ 1-3/
2010 2009
Number of magazines published 286 316
Magazine copies sold, thousands 86,457 94,859
Advertising pages sold 11,368 12,283
* Including joint ventures
Sanoma Magazines' net sales in January-March were slightly below the comparable
period's level with some growth in Belgium and Finland while other businesses
were slightly down. Adjusted for changes in the Division structure, sales were
down by 0.7%.
The Division's advertising sales were at the comparable period's level and
represented 29% (2009: 29%) of net sales. Advertising sales grew in the
Netherlands, but continued to decrease in Sanoma Magazines International's
markets. Sanoma Magazines' online advertising sales grew, in particular due to
the good development in the Netherlands.
Sanoma Magazines' circulation sales remained stable and represented 62% (62%) of
the Division's net sales. Subscription sales were slightly above the comparable
period, but single copy sales declined slightly, mostly in the CEE countries.
Sanoma Magazines Netherlands' net sales were down by 3%, due to lower print
advertising sales than in the comparable period. According to Nielsen Media
Research, the consumer magazine advertising market in the Netherlands decreased
by 5% in January-March. Sanoma Magazines Netherlands' sales outperformed the
market development. Online advertising sales grew clearly. In total, advertising
sales represented 28% (2009: 26%) of Sanoma Magazines Netherlands' net sales.
Its circulation revenues were slightly down, due to timing differences in the
number of issues published. These mainly affected single copy sales -
subscription sales were almost at the comparable period's level. In the first
quarter, Sanoma Magazines Netherlands developed in particular its online
operations and strengthened its portfolio of comparison sites.
Sanoma Magazines International's net sales decreased by 4%. The economic
downturn in the CEE countries and Russia continued to have an effect on sales in
all of Sanoma Magazines International's countries. Advertising sales,
representing 47% (2009: 49%) of Sanoma Magazines International's net sales,
decreased especially in Russia and Bulgaria. Circulation sales decreased
slightly. Sanoma Magazines International's subscription sales were stable, but
single copy sales fell slightly, partly due to discontinuation of magazines and
adjustments in the publication frequency of several titles carried out in 2009,
in particular in Russia. In Hungary, Sanoma Magazines International improved its
digital media position through acquisition of Házipatika.com Group, which
operates, among other sites, Hungary's most visited healthcare website. In
Romania, the leading car magazine Auto motor si Sport is now part of Sanoma
Magazines International's portfolio.
Net sales at Sanoma Magazines Belgium grew by 4%. The growth came from
circulation sales with both subscription sales and single copy sales developing
positively and in line with the readers' market. Following the market
development, Sanoma Magazines Belgium's advertising sales were slightly below
the comparable period and represented 26% (2009: 28%) of net sales.
Sanoma Magazines Finland's net sales increased by 2%. According to TNS Gallup
Adex, advertising in consumer magazines in Finland decreased by 10% in
January-March. Sanoma Magazines Finland's advertising sales outperformed the
market development. For the second year in a row, Sanoma Magazines Finland's
media sales were awarded as the best in Finland. Advertising sales represented
15% (2009: 14%) of Sanoma Magazines Finland's net sales. The volume of the
single copy market for magazines grew by 7%. Sanoma Magazines Finland's single
copy sales decreased slightly, but subscription sales grew and kept the
circulation sales at the comparable period's level. According to the National
Readership Survey, Sanoma Magazines Finland's key brands have continued to gain
more readers and its market share in the readers' market has improved further.
Sanoma Magazines' operating profit excluding non-recurring items in
January-March improved significantly, by 66% due to efficiency improvements. In
2009, the efficiency improvements started to have a visible impact in the second
half of the year. The number of personnel has reduced clearly from the
comparable period, and even from the year-end. Operating profit improved in all
businesses, in particular in Sanoma Magazines Netherlands and Sanoma Magazines
Finland. The operating profit did not include any non-recurring items.
Sanoma Magazines continues to develop its magazine portfolio with a special
focus on its key titles in each operating country. Sanoma Magazines is investing
in strengthening its market positions, and wants to become stronger in digital
media. The growth in digital operations can be achieved by leveraging existing
assets. E-readers also offer interesting opportunities for combining magazines
with digital media. At the same time Sanoma Magazines continues to strongly
focus on improving efficiency.
In 2010, Sanoma Magazines' net sales are expected to grow slightly and it is
estimated that operating profit excluding non-recurring items will be at the
previous year's level.
SANOMA NEWS
Sanoma News is the leading newspaper publisher in Finland and its printed and
digital products have a strong presence in the lives of Finns. In addition to
Helsingin Sanomat, the largest daily in the Nordic region, Sanoma News publishes
other national and regional newspapers and it is also one of the most
significant digital media players in Finland.
- Strong focus on media sales enabled Sanoma News to improve its market share in
the Finnish advertising market.
- The tabloid Ilta-Sanomat also continued its positive market share development
during the first quarter, and in March, it had 60% of the Finnish tabloid
market.
- Sanoma News improved its result due to earlier efficiency improvements and
positive development of advertising sales, in particular in March.
- Online advertising sales developed strongly during the first quarter.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2010 2009 % 2009
Net sales 109.4 107.7 1.6 428.9
Helsingin Sanomat 59.1 58.7 0.8 228.4
Ilta-Sanomat 19.9 18.4 7.8 78.2
Other publishing 25.3 25.9 -2.1 103.8
Other businesses 34.4 36.2 -5.2 143.7
Eliminations -29.3 -31.6 7.0 -125.2
Operating profit excluding non-recurring items * 9.6 8.3 15.3 40.6
% of net sales 8.8 7.8 9.5
Operating profit 15.6 6.0 158.2 32.2
Capital expenditure 2.8 3.2 -12.0 10.6
Number of employees at the end of the period (FTE) 2,168 2,393 -9.4 2,306
Average number of employees (FTE) 2,190 2,404 -8.9 2,399
* In 2010, the non-recurring items included in the first quarter a EUR 6.0
million gain on the sale of Lehtikuva. In 2009, the non-recurring items included
in the first quarter EUR 2.3 million and in the second quarter EUR 6.1 million
of expenses related to the efficiency programme.
Operational indicators 1-3/ 1-3/
2010 2009
Distribution of free sheets, millions 19.0 19.2
1-12/ 1-12/
Audited circulation 2009 2008
Helsingin Sanomat 397,838 412,421
Ilta-Sanomat 152,948 161,615
1-3/ 1-3/
Online services, unique visitors, weekly 2010 2009
Iltasanomat.fi 1,878,273 1,641,494
HS.fi 1,345,710 1,097,170
Huuto.net 494,833 473,677
Oikotie.fi 433,222 351,653
Taloussanomat.fi 575,841 465,231
Sanoma News' net sales in January-March increased by 2%. There were no
significant changes in the Division structure, so all growth was organic.
The advertising market in Finland turned slightly positive in February, and also
the cumulative development in the first quarter was slightly better than in the
comparable period. According to TNS Gallup Adex, newspaper advertising in
Finland decreased by 2% in January-March. Job advertising in Finland increased
by 3%, but real estate advertising decreased by 10%. Advertising in free sheets
was up by 8%, partly due to changes in reporting. Online advertising included in
the statistics recovered more quickly than other media and grew by 18%.
In the first quarter, Sanoma News' advertising sales outperformed the market
development and grew by 3%, with online advertising sales performing clearly
better than the market and growing by 26%. In total, advertising sales
represented 47% (2009: 46%) of the Division's net sales. One of Sanoma News'
aims has been to strengthen its market share in the media market, and its strong
brands and active media sales led to improved market position in the first
quarter.
The Division's circulation sales improved by 0.9% due to increased subscription
sales. The tabloid sales have long been affected by structural migration to
online. In January-March, the Finnish tabloid market decreased by 3%.
Circulation sales accounted for 43% (2009: 43%) of the Division's net sales. The
trend in circulation volumes is decreasing, but the strong growth in the number
of online visitors continues and Sanoma News' total reach improved further in
January-March.
The net sales development of the Helsingin Sanomat business unit turned slightly
positive with circulation sales performing well. Also both advertising sales as
well as market share of the daily paper improved during the first quarter and in
March in particular advertising sales showed positive signs. Cumulative job
advertising in the daily print edition of Helsingin Sanomat was 1% above the
comparable period, but real estate advertising was still 5% lower. In total,
advertising sales represented 54% (2009: 55%) of the business unit's net sales.
The Ilta-Sanomat business unit's net sales grew by 8%, following the good
development of both advertising and single copy sales. Due to interesting
supplement magazines and other products, Ilta-Sanomat was able to improve its
market position in the tabloid newsstand market and now has a cumulative market
share of 58.5% (2009: 57.0%), its highest level since 2007. Online advertising
sales of the business unit doubled from the comparable year. In total,
advertising sales represented 25% (2009: 21%) of the business unit's net sales
in the first quarter.
Net sales from other publishing were almost at the comparable period's level.
Circulation and advertising sales in regional papers grew slightly. Advertising
sales in free sheets was down. Online advertising sales in the Sanoma Digital
Finland business unit grew significantly and outperformed the market in the
first quarter. Oikotie.fi, Sanoma Digital Finland's classifieds portal, has
improved its market position in the online job advertising market.
Net sales from other businesses, mainly comprising internal billing, decreased
by 5% due to fewer internal printing jobs and the divestment of the picture
agency Lehtikuva to the Finnish News Agency (STT) on 1 March.
In January-March, Sanoma News' operating profit excluding non-recurring items
improved by 15% due to positive development of advertising sales and the effects
of saving initiatives started in 2009. Operating profit improved in particular
in the Helsingin Sanomat business unit. The headcount of the Division decreased
by some 140 persons from the year-end. The non-recurring items included in the
operating profit totalled EUR 6.0 million (2009: -2.3 million) and consisted of
capital gain on the divestment of Lehtikuva.
Sanoma News is looking for new sources of revenues through development of the
product and service portfolio. The investment in the new reader-customer
management system will support product development opportunities for newspapers
in the multimedia environment. The visibility in the Finnish advertising market
remains low, but there have been positive signs towards the end of the first
quarter of 2010. Strengthening market share both in the media market and in the
readers' market remains a key priority for Sanoma News.
In 2010, Sanoma News' net sales are expected to be at the previous year's level
and operating profit excluding non-recurring items is estimated to improve
slightly.
SANOMA ENTERTAINMENT
Sanoma Entertainment offers entertaining experiences on television, radio and
online. Sanoma Entertainment's business units include Nelonen Media, which
focuses on broadcast operations, and Welho, Finland's largest cable television
operator. The Division's newest business unit is Sanoma Games, which
concentrates on online casual gaming.
- Nelonen Media's viewing and listening shares developed positively. In the
first quarter, the TV channels' commercial viewing share grew by four percentage
points in its main target group.
- Both viewing and online advertising sales of Ruutu.fi, the Division's online
TV service, grew significantly.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2010 2009 % 2009
Net sales 41.5 40.3 3.0 157.1
TV and radio 23.5 23.5 0.1 88.1
Other businesses 18.2 17.3 5.5 70.4
Eliminations -0.2 -0.5 56.7 -1.4
Operating profit excluding non-recurring items 6.2 6.1 1.0 20.7
% of net sales 14.9 15.2 13.2
Operating profit 6.2 6.1 1.0 20.7
Capital expenditure 1.5 2.0 -24.4 9.3
Number of employees at the end of the period (FTE) 438 489 -10.4 458
Average number of employees (FTE) 441 486 -9.4 469
Operational indicators 1-3/ 1-3/
Thousands 2010 2009
TV channels' share of Finnish TV advertising 34.2% 33.2%
TV channels' national commercial viewing share 30.2% 28.1%
TV channels' national viewing share 14.1% 13.5%
Number of connected households (31 March) 320 324
Number of Welho customers (31 March) 163 156
Number of fixed broadband connections (31 March) 115 107
Sanoma Entertainment's net sales in January-March grew by 3% with advertising
sales accounting for 52% (2009: 53%) of the Division's net sales. There were no
changes in the Division structure, so all growth was organic.
The broadcast operation's net sales were at the comparable period's level. The
Finnish TV advertising market grew by 3% in the first quarter according to TNS
Gallup Adex. Nelonen Media was able to further increase its market share to
34.2%, thanks to its successful multichannel strategy in TV operations. In the
first quarter, Nelonen Media's commercial viewing share also improved to 36.1%
(2009: 32.3%) in its main target group, viewers between 10 and 44 years of age.
The viewing shares were boosted by the success of the smaller channels, Liv and
Jim. Advertising sales of the online TV service Ruutu.fi are growing fast.
According to the Association of Finnish Broadcasters, national radio advertising
remained stable in January-March. Nelonen Media's radio channels developed in
line with the market.
Net sales from other operations increased by 6% with broadband sales performing
particularly well. Cable TV and broadband operator Welho has further developed
its service offering for housing companies, which enables Welho to offer a wider
range of services to individual households. Broadband sales have been boosted by
the introduction of faster connections: Welho is now offering a minimum
connection speed of 10M and a maximum of 200M. Welho also continues to actively
develop its service offering for cable TV, and is now offering 20 HD channels.
Sanoma Entertainment's operating profit excluding non-recurring items in
January-March was at the comparable period's level. The operating profit did not
include any non-recurring items. The operating profit improved in other
operations due to good sales development. In broadcasting, more programming
investments were made in the first quarter, which increased the viewing shares.
In 2009, programming investments were weighted more towards the second half of
the year.
Sanoma Entertainment focuses on developing its television and broadband services
as well as its online gaming operations. In recent years, Sanoma Entertainmenthas renewed its products and services considerably. This portfolio will help
Sanoma Entertainment to retain the good market shares it gained in 2009 and to
improve its position further.
In 2010, Sanoma Entertainment's net sales and operating profit excluding
non-recurring items are expected to be at the previous year's level.
SANOMA LEARNING & LITERATURE
Sanoma Learning & Literature, operating in 11 countries, is a leading European
provider of learning materials and solutions in print and digital format. The
Division has growing international language service operations and is also the
leading general literature publisher in Finland.
- Sanoma Learning & Literature improved its result in the first quarter from the
comparable period's level.
- Co-operation began in developing e-learning materials for the leading Russian
learning material provider.
- Malmberg received a Dutch IPOn Award for the innovativeness of its tailor-made
e-learning solution for students and teachers in secondary education.
- Positive signs in the recovery of the language services business can be seen.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2010 2009 % 2009
Net sales 58.2 60.8 -4.3 345.1
Learning 29.9 30.6 -2.1 239.1
Language services 6.9 8.3 -16.4 27.5
Literature and other businesses 23.6 24.6 -4.0 88.9
Eliminations -2.3 -2.6 12.6 -10.4
Operating profit excluding non-recurring items * -5.2 -6.9 24.4 43.5
% of net sales -9.0 -11.3 12.6
Operating profit -6.4 -6.9 7.0 38.5
Capital expenditure 2.9 2.3 25.7 13.1
Number of employees at the end of the period (FTE) 2,637 2,873 -8.2 2,745
Average number of employees (FTE) 2,689 2,863 -6.1 2,780
*In 2010, the non-recurring items included in the first quarter a EUR 1.2
million loss on the sale of Bertmark Norge. In 2009, the non-recurring items
included in the third quarter EUR 1.5 million and in the fourth quarter EUR 2.4
million of restructuring expenses and in the third quarter EUR 1.1 million of
expenses related to the sale of children's magazines.
Operational indicators 1-3/ 1-3/
2010 2009
Learning
Number of new titles published, books 200 319
Number of new titles published, digital products 97 60
Literature and other businesses
Number of new titles published, books 116 111
Number of new titles published, digital products 51 23
Books sold, millions 2.7 2.5
Sanoma Learning & Literature's net sales in January-March were 4% below the
comparable period due to lower sales in language services and literature. There
were no significant changes in the Division structure.
Net sales in learning were down by 2%. Typically, sales for learning are slow in
the first quarter and most changes are due to the timing of sales. Sales in the
Netherlands were slightly down due to the divestment of the consumer business in
2009. In Finland, net sales were down since the sales of business books and
training remained under pressure. There are signs of some pressure in the
learning material markets in the Netherlands and Finland, where most of the
material is funded by the government. It is, however, too soon to draw any
conclusions for the full year. Net sales in Belgium and Hungary were in line
with the comparable period. In Poland, Nowa Era continued its good sales
development. The sales of e-learning provider YDP also increased. Sanoma
Learning began co-operating with Prosveshcheniye Publishers, the leading Russian
learning material provider, on developing their e-learning solutions.
Net sales in language services were down by 16%. Sales of language services have
been strongly affected by the general economic situation, but positive signs
could be seen in the sales of translation & localisation services, which is back
at the comparable period's level and continues to improve. In 2009, language
services focused on integration and improving its processes and it is now well
prepared to improve its service level. In March, a new office was established in
Shanghai, China, to serve the Nordic customer-base.
Net sales in literature and other businesses decreased by 4%. Most of the
decrease came from the multi-volume and year-book publishing operations, which
have been continuously downscaled. The operations in Norway were divested at the
end of March. General literature sales also remained sluggish, in line with the
market development. Sales in printing grew slightly due to the acquisition made
at the end of 2009. The consolidation of printing operations is progressing as
planned.
The Division's operating result excluding non-recurring items improved in
January-March and the operating loss was 24% less than in the comparable period.
The non-recurring items included in the operating profit totalled EUR -1.2
million (2009: EUR 0.0 million) and were related to the divestment of the
Norwegian multi-volume business. The result improved in learning and language
services due to the efficiency improvements. In learning, the increase was
partly caused by timing differences in sales. In the comparable year, some units
accrued their result mostly in the second quarter, whereas in 2010, sales and
operating profit were accrued already in the first quarter. The result also
improved in printing, but decreased in literature.
Sanoma Learning & Literature continues to focus on growth through further
internationalisation of its learning and language services businesses. At the
same time, the Division will continue to restructure its operations. Customers
are increasingly looking for customised solutions both in learning and language
services. Sanoma Learning & Literature is well positioned to offer these and can
gain efficiency from developing platforms to be used in several markets.
In 2010, it is estimated that the net sales and operating profit excluding
non-recurring items of Sanoma Learning & Literature will increase somewhat from
the previous year's level.
SANOMA TRADE
Operating in eight countries, retail specialist Sanoma Trade's strengths lie in
a thorough understanding of customers' needs and solid concepts. Sanoma Trade
serves its customers in 230 million annual sales contacts at kiosks, bookstores
and movie theatres. Sanoma Trade's trade services business unit (previously
press distribution) is a strong link between publishers and retailers.
- Movie operations continued their success: sales and movie admissions grew both
in Finland and in the Baltic countries.
- The sales of Finnish kiosk operations were weakened by the new Opening Hours
Act.
- Economic conditions remained weak in the Baltic countries as well as in Russia
and Romania.
Key indicators 1-3/ 1-3/ Change 1-12/
EUR million 2010 2009 % 2009
Net sales 191.8 187.7 2.2 827.8
Kiosk operations 91.9 89.9 2.3 404.2
Trade services 51.9 50.5 2.8 227.9
Bookstores 26.0 27.3 -4.7 123.3
Movie operations 25.4 23.6 7.6 88.0
Eliminations -3.4 -3.6 6.1 -15.6
Operating profit excluding non-recurring items * 2.9 3.8 -24.6 27.6
% of net sales 1.5 2.0 3.3
Operating profit 2.9 3.8 -24.6 24.0
Capital expenditure 4.7 8.1 -41.8 25.5
Number of employees at the end of the period (FTE) 5,849 6,342 -7.8 5,943
Average number of employees (FTE) 5,827 6,448 -9.6 6,164
* In 2010, the operating profit did not include any non-recurring items. In
2009, the non-recurring items included in the fourth quarter EUR 3.6 million of
restructuring expenses.
Operational indicators 1-3/ 1-3/
Thousands 2010 2009
Customer volume in kiosk operations 43,787 48,180
Customer volume in bookstores 1,718 1,747
Customer volume in movie theatres 2,907 2,622
Number of copies sold (press distribution) 82,626 85,123
Sanoma Trade's net sales in January-March grew by 2% with most businesses
increasing their sales. There were no changes in the Division structure, so all
growth was organic.
Net sales from kiosk operations increased by 2%. Kiosk sales in Finland
developed favourably during the weekdays, but the legislation on opening hours
has had strong effects on sales other than commission sales on Sundays and
therefore net sales remained flat. In Latvia and Lithuania, kiosk sales grew. In
Estonia and Russia, kiosk sales were down from the comparable period. In Russia,
the sales were affected by the discontinuation of units. Altogether Sanoma Trade
closed down over 100 kiosks in its operating countries in 2009. In Finland, the
renewal of the R-kioski concept is in the testing phase and the results of the
first pilot kiosks will be evaluated during the summer of 2010.
Net sales from trade services grew by 3%. Press volumes showed some growth in
Finland and the Netherlands, and net sales of trade services grew in these
countries. In the Baltic markets, the economic situation and the VAT increases
made at the end of 2009 continued to affect volumes negatively.
Net sales from bookstores were 5% behind the comparable period with demand being
clearly lower both in Finland and Estonia. In Finland, Sanoma Trade's bookstores
have been able to gain market share in educational materials.
Net sales from movie operations grew by 8%. The development was particularly
good in Finland. Net sales also grew in the Baltic countries despite increased
competition. In all operating countries, 3D movies were very popular, which
contributed to the increased sales.
Sanoma Trade's operating profit excluding non-recurring items in January-March
was 25% behind the comparable period. The operating profit did not include any
non-recurring items. The operating profit improved in movie operations, but
decreased in other businesses. The new opening hours of other retailers have
shifted the kiosk sales more towards the lower margin commission sales, such as
lottery and travel tickets. The restructuring of the Russian and the Estonian
operations, which started in the second half of 2009, continues.
Sanoma Trade continues to develop its concepts, particularly its kiosk and
bookstore concepts, to better cater for the needs of its customers in different
markets. With its 230 million annual customer contacts, Sanoma Trade gains
valuable consumer insight and has good possibilities to develop its product and
service offering.
In 2010, Sanoma Trade's net sales are expected to increase slightly and
operating profit excluding non-recurring items to be at the previous year's
level.
THE GROUP
Dividend
The Annual General Meeting on 8 April 2010 decided to pay a dividend of EUR
0.80 (2009: EUR 0.90). The dividends were paid on 20 April 2010 in Finland.
Shares and holdings
In January-March, 14,018,438 (2009: 22,324,951) Sanoma shares were traded on the
NASDAQ OMX. Traded shares accounted for 9% (2009: 14%) of the average number of
shares. Sanoma's total stock exchange turnover was EUR 218.5 million (2009: EUR
207.1 million).
The volume-weighted average price of a Sanoma share in the first quarter was EUR
15.58, with a low of EUR 13.97 and a high of EUR 16.69. At the end of March,
Sanoma's market capitalisation was EUR 2.7 billion (2009: EUR 1.5 billion), with
Sanoma's share closing at EUR 16.40 (2009: EUR 9.62). The Company had 21,646
shareholders at the end of March, with foreign holdings accounting for 11.4%
(2009: 9.7%) of all shares and votes. There were no major changes in share
ownership in the first quarter, and Sanoma did not issue any flagging
announcements. At the end of March, Sanoma had 161,816,894 shares.
Board of Directors, auditors and management
The AGM of 8 April 2010 confirmed the number of Sanoma's Board members at ten.
Board members Sirkka Hämäläinen-Lindfors and Seppo Kievari were re-elected and
Antti Herlin was elected as a new member to the Board. The Board of Directors of
Sanoma consists of Jaakko Rauramo (Chairman), Sakari Tamminen (Vice Chairman),
and Annet Aris, Robert Castrén, Jane Erkko, Antti Herlin, Paavo Hohti, Sirkka
Hämäläinen-Lindfors, Seppo Kievari and Rafaela Seppälä as members.
The AGM re-appointed Pekka Pajamo, APA, and Sixten Nyman, APA, as his deputy,
and Authorised Public Accountants KPMG Oy Ab, with Kai Salli, APA, acting as
the Auditor in Charge, as the auditors of the Company.
Pekka Soini was appointed acting President of the Sanoma News Division and a
member of the Group's Executive Management Group (EMG) as of 1 April 2010, when
the former President Mikael Pentikäinen began as the publisher and senior
editor-in-chief of the Finnish daily Helsingin Sanomat.
Board authorisations and other resolutions by the AGM
The AGM held of 8 April 2010 authorised the Board of Directors to decide on an
issuance of a maximum of 82,000,000 new shares and a transfer of a maximum of
5,000,000 treasury shares. The authorisation will be valid until 30 June 2013.
The AGM also authorised the Board to decide on the repurchase of a maximum of
16,000,000 of the Company's own shares. This authorisation is effective until
30 June 2011 and terminates the corresponding authorisation granted by the AGM
on 1 April 2009.
The AGM amended the Articles of Association of the Sanoma Corporation to
correspond to the Finnish Limited Liability Companies Act in force. Several
articles and sections were removed as unnecessary and others were clarified. The
new Articles of Association are presented on the Group's website Sanoma.com.
Seasonal fluctuation
The net sales and result of Sanoma Magazines, Sanoma News and Sanoma
Entertainment are particularly affected by the development of advertising.
Advertising sales are influenced, for example, by the number of newspaper and
magazine issues published each quarter, which varies annually. Television
advertising in Finland is usually strongest in the second and fourth quarters.
Learning accrues most of its net sales and results during the second and third
quarters.
A major portion of the net sales and results in retail are, on the other hand,
generated in the last quarter, particularly from Christmas sales. Of course, the
number of shopping days and, for example, the distribution of holidays over
different quarters impacts the retail sales between quarters.
Seasonal business fluctuations influence the Group's net sales and operating
profit, with the first quarter traditionally being clearly the smallest one for
both.
Significant risks and uncertainty factors
The most significant risks and uncertainty factors Sanoma currently faces are
described in the Financial Statements and on the Group's website at Sanoma.com,
together with the Group's main principles of risk management. Many of the
identified risks relate to changes in customer preferences. Ongoing digitisation
has been the driving force behind these changes for some time, and Sanoma has
identified action plans in all its divisions on how to respond to this
challenge.
Normal business risks associated with the industry relate to developments in
media advertising and consumer spending. Media advertising is sensitive to
economic fluctuations. Therefore, the general economic conditions of the
countries in which the Group operates and the economic trends of the industry
influence Sanoma's business activities and operational performance.
INTERIM REPORT (UNAUDITED)
Accounting policies
The Sanoma Group has prepared its Interim Report in accordance with IAS 34
'Interim Financial Reporting' while adhering to related IFRS standards and
interpretations applicable within the EU on 31 March 2010.
The Group has applied e.g. the following revised and amended standards as of 1
January 2010: IFRS 3 (Revised 2008) Business Combinations and IAS 27 (Amended
2008) Consolidated and Separate Financial Statements.
The adoption of the revised IFRS 3 'Business Combinations' will have an impact
on the amount of goodwill from acquisitions and results on disposing businesses.
The standard is estimated to also have an impact on profit and loss in those
periods in which new business is acquired, the deferred purchase price is paid
or additional shares are acquired. According to the transitional provisions of
the standard, business combinations for which the acquisition date is before the
adoption of the standard, are not adjusted.
The amended IAS 27 'Consolidated and Separate Financial Statements' requires the
effects of all transactions with a non-controlling interest to be recorded in
equity if the control remains with the parent company. The amendment also
specifies that a share of the loss for period can also be allocated to
non-controlling interest when the losses exceed the amount of invested capital
by the non-controlling parties.
The accounting policies of the Interim Report and the definitions of key
indicators are presented on the Sanoma website at Sanoma.com. All figures have
been rounded and consequently the sum of individual figures can deviate from the
presented sum figure. Key figures have been calculated using exact figures. This
Interim Report is unaudited.
CONSOLIDATED INCOME STATEMENT 1-3/ 1-3/ 1-12/
EUR million 2010 2009 2009
NET SALES 637.9 636.0 2,767.9
Other operating income 20.4 14.1 64.6
Materials and services 279.0 286.4 1,238.5
Employee benefit expenses 169.1 176.2 695.5
Other operating expenses 128.9 128.2 536.2
Depreciation, amortisation and impairment losses 40.8 38.4 167.0
----------------------------------------------------------------------------
OPERATING PROFIT 40.4 20.9 195.4
Share of results in associated companies -2.4 0.3 -3.9
Financial income 2.2 6.7 22.5
Financial expenses 6.0 17.0 52.6
----------------------------------------------------------------------------
RESULT BEFORE TAXES 34.1 10.9 161.4
Income taxes -10.0 -3.2 -54.3
----------------------------------------------------------------------------
RESULT FOR THE PERIOD 24.1 7.7 107.1
Result attributable to:
Equity holders of the Parent Company 25.9 8.3 105.6
Non-controlling interests -1.8 -0.6 1.6
Earnings per share for result attributable to the equity
holders of the Parent company:
Earnings per share, EUR 0.16 0.05 0.66
Diluted earnings per share, EUR 0.16 0.05 0.66
STATEMENT OF COMPREHENSIVE INCOME
EUR million 1-3/ 1-3/ 1-12/
2010 2009 2009
Result for the period 24.1 7.7 107.1
Other comprehensive income:
Change in translation differences 20.3 -34.7 -5.0
----------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 44.4 -27.0 102.1
Total comprehensive income attributable to:
Equity holders of the Parent Company 45.8 -25.8 100.5
Non-controlling interests -1.4 -1.2 1.6
CONSOLIDATED BALANCE SHEET
EUR million 31.3.2010 31.3.2009 31.12.2009
ASSETS
NON-CURRENT ASSETS
Tangible assets 470.2 503.7 484.2
Investment property 9.3 9.6 9.4
Goodwill 1,499.8 1,480.9 1,488.9
Other intangible assets 417.5 386.2 399.3
Interests in associated companies 60.8 70.2 63.5
Available-for-sale financial 15.8 20.5 15.7
assets
Deferred tax receivables 33.3 37.1 30.1
Trade and other receivables 30.9 40.1 31.4
--------------------------------------------------------------------------------
NON-CURRENT ASSETS, TOTAL 2,537.7 2,548.2 2,522.3
CURRENT ASSETS
Inventories 139.4 150.3 141.6
Income tax receivables 20.5 37.4 19.3
Trade and other receivables 379.3 395.8 362.9
Available-for-sale financial 0.5 0.5 0.5
assets
Cash and cash equivalents 60.1 82.9 59.7
--------------------------------------------------------------------------------
CURRENT ASSETS, TOTAL 599.8 667.0 584.0
ASSETS, TOTAL 3,137.5 3,215.1 3,106.3
EQUITY AND LIABILITIES
EQUITY
Equity attributable to the equity holders of the Parent
Company
Share capital 71.3 71.3 71.3
Fund for invested unrestricted 188.8 192.7 188.8
equity
Other equity 976.7 931.4 931.1
--------------------------------------------------------------------------------
1,236.8 1,195.3 1,191.2
Non-controlling interests 14.9 13.8 15.4
--------------------------------------------------------------------------------
EQUITY, TOTAL 1,251.7 1,209.1 1,206.6
NON-CURRENT LIABILITIES
Deferred tax liabilities 103.2 104.0 101.2
Pension obligations 30.0 37.3 29.9
Provisions 9.7 6.3 10.7
Interest-bearing liabilities 550.9 677.2 541.6
Trade and other payables 28.4 36.1 28.2
CURRENT LIABILITIES
Provisions 15.8 9.3 23.8
Interest-bearing liabilities 440.5 422.2 476.1
Income tax liabilities 22.5 13.7 16.9
Trade and other payables 684.8 699.9 671.3
--------------------------------------------------------------------------------
LIABILITIES, TOTAL 1,885.8 2,006.1 1,899.7
EQUITY AND LIABILITIES, TOTAL 3,137.5 3,215.1 3,106.3
CHANGES IN CONSOLIDATED EQUITY
EUR million
Equity attributable to the equity holders of the Parent
Company
Fund for Non-
inves- cont-
ted rol-
Trea- unres- ling Equi-
Share sury tricted Other inte- ty,
capital shares equity equity Total rests total
Equity at
1 Jan 2009 71.3 -37.5 192.7 993.7 1,220.1 17.0 1,237.1
Cancellation
of treasury shares 37.5 -37.5
--------------------------------------------------------------------------------
Expense
recognition of
options granted 1.0 1.0 1.0
--------------------------------------------------------------------------------
Dividends paid -0.7 -0.7
--------------------------------------------------------------------------------
Change in non-
controlling
interests -1.3 -1.3
--------------------------------------------------------------------------------
Comprehensive
income for the period -25.8 -25.8 -1.2 -27.0
--------------------------------------------------------------------------------
Equity at
31 March 2009 71.3 192.7 931.4 1,195.3 13.8 1,209.1
Equity at
1 Jan 2010 71.3 188.8 931.1 1,191.2 15.4 1,206.6
Expense
recognition of
options granted 0.9 0.9 0.9
--------------------------------------------------------------------------------
Dividends paid -0.1 -0.1
--------------------------------------------------------------------------------
Change in non-
controlling
interests -1.1 -1.1 1.0 -0.1
--------------------------------------------------------------------------------
Comprehensive
income for the period 45.8 45.8 -1.4 44.4
--------------------------------------------------------------------------------
Equity at
31 March 2010 71.3 188.8 976.7 1,236.8 14.9 1,251.7
INCOME STATEMENT BY QUARTER
EUR million 1-3/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2010 2009 2009 2009 2009 2009
NET SALES 637.9 636.0 697.2 701.1 733.6 2,767.9
Other operating income 20.4 14.1 19.4 13.3 17.9 64.6
Materials and services 279.0 286.4 304.8 315.0 332.2 1,238.5
Employee benefit expenses 169.1 176.2 174.8 160.5 184.0 695.5
Other operating expenses 128.9 128.2 129.0 122.1 156.8 536.2
Depreciation, amortisation and impairment 40.8 38.4 42.8 39.8 46.0 167.0
losses
--------------------------------------------------------------------------------
OPERATING PROFIT 40.4 20.9 65.1 77.1 32.3 195.4
Share of results in associated companies -2.4 0.3 -0.6 -2.0 -1.6 -3.9
Financial income 2.2 6.7 8.8 4.1 2.8 22.5
Financial expenses 6.0 17.0 12.3 12.0 11.3 52.6
--------------------------------------------------------------------------------
RESULT BEFORE TAXES 34.1 10.9 61.1 67.2 22.3 161.4
Income taxes -10.0 -3.2 -17.4 -20.0 -13.7 -54.3
--------------------------------------------------------------------------------
RESULT FOR THE PERIOD 24.1 7.7 43.7 47.2 8.6 107.1
Result attributable to:
Equity holders of the Parent Company 25.9 8.3 43.3 47.6 6.4 105.6
Non-controlling interests -1.8 -0.6 0.3 -0.3 2.2 1.6
Earnings per share for result attributable
to the equity holders of the Parent company:
Earnings per share, EUR 0.16 0.05 0.27 0.30 0.04 0.66
Diluted earnings per share, EUR 0.16 0.05 0.27 0.30 0.04 0.66
CONSOLIDATED CASH FLOW STATEMENT 1-3/ 1-3/ 1-12/
EUR million 2010 2009 2009
OPERATIONS
Result for the period 24.1 7.7 107.1
Adjustments
Income taxes 10.0 3.2 54.3
Financial expenses 6.0 17.0 52.6
Financial income -2.2 -6.7 -22.5
Share of results in associated companies 2.4 -0.3 3.9
Depreciation and impairment losses 40.8 38.4 167.0
Gains/losses on sales of non-current assets -6.1 -1.1 -2.4
Other adjustments -11.5 -11.6 -56.4
Change in working capital
Change in trade and other receivables -11.1 6.9 47.4
Change in inventories -1.0 -0.2 5.6
Change in trade and other payables, and provisions -1.3 -26.4 -36.9
Interest paid -2.9 -18.6 -34.6
Other financial items -0.6 -1.4 -2.0
Taxes paid -8.7 -15.4 -41.4
--------------------------------------------------------------------------------
CASH FLOW FROM OPERATIONS 38.0 -8.5 241.8
INVESTMENTS
Acquisition of tangible and intangible assets -16.9 -23.9 -80.2
Operations acquired -6.7 -15.2 -27.1
Sales of tangible and intangible assets 3.7 1.2 5.4
Operations sold 6.1 0.0 0.5
Loans granted -1.0 -1.1 -0.9
Repayments of loan receivables 0.7 2.4 3.3
Sales of short-term investments 0.0
Interest received 0.5 1.6 4.8
Dividends received 0.1 0.2 4.3
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENTS -13.5 -34.8 -89.9
CASH FLOW BEFORE FINANCING 24.4 -43.3 151.9
FINANCING
Proceeds from share subscriptions 12.3
Change in loans with short maturity -25.3 -68.9 -42.6
Drawings of other loans 52.1 233.7 399.7
Repayments of other loans -40.4 -150.9 -460.0
Payment of finance lease liabilities -0.9 -1.1 -3.5
Dividends paid -0.1 -0.7 -146.2
Donations/other profit sharing -0.5
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING -14.6 12.3 -240.8
CHANGE IN CASH AND CASH EQUIVALENTS
ACCORDING TO CASH FLOW STATEMENT 9.8 -31.1 -88.9
Effect of exchange rate differences on cash and cash 2.3 -4.0 0.0
equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS 12.1 -35.1 -88.9
Cash and cash equivalents at the beginning of the period 21.6 110.5 110.5
Cash and cash equivalents at the end of the period 33.7 75.4 21.6
Cash and cash equivalents in cash flow statement include cash and cash
equivalents less bank overdrafts.
NET SALES BY BUSINESS
EUR million 1-3/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2010 2009 2009 2009 2009 2009
SANOMA MAGAZINES
Sanoma Magazines Netherlands 107.4 110.6 123.2 120.7 138.6 493.2
Sanoma Magazines International 48.7 50.9 53.2 48.8 58.5 211.3
Sanoma Magazines Belgium 53.5 51.3 52.6 50.8 57.5 212.3
Sanoma Magazines Finland 51.2 50.3 48.0 46.9 53.5 198.8
Eliminations -1.0 -1.0 -1.2 -1.2 -1.0 -4.3
-----------------------------------------------------------------------
TOTAL 259.9 262.1 275.9 266.1 307.1 1,111.2
SANOMA NEWS
Helsingin Sanomat 59.1 58.7 55.4 53.3 61.1 228.4
Ilta-Sanomat 19.9 18.4 19.8 19.6 20.3 78.2
Other publishing 25.3 25.9 26.8 24.2 26.9 103.8
Other businesses 34.4 36.2 35.9 34.9 36.6 143.7
Eliminations -29.3 -31.6 -30.9 -30.8 -32.0 -125.2
-----------------------------------------------------------------------
TOTAL 109.4 107.7 107.1 101.2 112.9 428.9
SANOMA ENTERTAINMENT
TV and radio 23.5 23.5 23.6 17.4 23.6 88.1
Other businesses 18.2 17.3 17.4 17.8 18.0 70.4
Eliminations -0.2 -0.5 -0.3 -0.2 -0.4 -1.4
-----------------------------------------------------------------------
TOTAL 41.5 40.3 40.6 35.0 41.1 157.1
SANOMA LEARNING & LITERATURE
Learning 29.9 30.6 81.6 94.3 32.7 239.1
Language services 6.9 8.3 6.2 6.7 6.3 27.5
Literature and other businesses 23.6 24.6 17.0 19.3 28.0 88.9
Eliminations -2.3 -2.6 -2.8 -2.7 -2.3 -10.4
-----------------------------------------------------------------------
TOTAL 58.2 60.8 101.9 117.6 64.7 345.1
SANOMA TRADE
Kiosk operations 91.9 89.9 104.5 99.3 110.5 404.2
Trade services 51.9 50.5 57.4 59.4 60.6 227.9
Bookstores 26.0 27.3 19.7 31.8 44.5 123.3
Movie operations 25.4 23.6 18.0 22.7 23.6 88.0
Eliminations -3.4 -3.6 -3.9 -4.1 -4.0 -15.6
-----------------------------------------------------------------------
TOTAL 191.8 187.7 195.7 209.2 235.3 827.8
Other companies and eliminations -23.0 -22.7 -24.1 -28.0 -27.5 -102.3
-----------------------------------------------------------------------
TOTAL 637.9 636.0 697.2 701.1 733.6 2,767.9
OPERATING PROFIT BY DIVISION
EUR million 1-3/ 1-3/ 4-6/ 7-9/ 10-12/ 1-12/
2010 2009 2009 2009 2009 2009
Sanoma Magazines 25.8 15.5 30.2 23.1 27.4 96.3
Sanoma News 15.6 6.0 3.5 11.8 10.8 32.2
Sanoma Entertainment 6.2 6.1 6.9 3.8 3.9 20.7
Sanoma Learning & Literature -6.4 -6.9 25.1 33.1 -12.8 38.5
Sanoma Trade 2.9 3.8 3.8 9.7 6.7 24.0
Other companies and eliminations -3.7 -3.7 -4.3 -4.4 -3.7 -16.2
-----------------------------------------------------------------
TOTAL 40.4 20.9 65.1 77.1 32.3 195.4
SEGMENT INFORMATION
The operating segments of the Sanoma Group comprise the Group's five divisions:
Sanoma Magazines, Sanoma News, Sanoma Entertainment, Sanoma Learning &
Literature and Sanoma Trade. The segmentation is based on business model and
product differences. The media business, based on advertising and circulation
sales, is divided into three segments: Sanoma Magazines is responsible for
magazines, Sanoma News for newspapers and Sanoma Entertainment for TV and
broadband business. Sanoma Learning & Literature's business is mainly b-2-b
business. Sanoma Trade, on the other hand, operates on a retail business model.
In addition to the Group eliminations column, unallocated/eliminations includes
Sanoma Corporation and real estate companies as well as items not allocated to
segments.
Segment assets do not include cash and cash equivalents, interest-bearing
receivables and tax receivables. Transactions between segments are based on
market prices.
Sanoma Divisions 1.1-31.3.2010
Lear- Unallo-
Enter- ning & cated/ Con-
Maga- tain- Lite- elimi- soli-
EUR million zines News ment rature Trade nations dated
----------------------------------------------------------------------
External net sales 259.2 107.4 40.8 55.1 175.1 0.2 637.9
Internal net sales 0.7 2.0 0.7 3.1 16.7 -23.2
NET SALES, TOTAL 259.9 109.4 41.5 58.2 191.8 -23.0 637.9
OPERATING PROFIT 25.8 15.6 6.2 -6.4 2.9 -3.7 40.4
Share of results in
associated companies -2.5 0.1 0.0 -2.4
Financial income 2.2 2.2
Financial expense 6.0 6.0
RESULT BEFORE TAXES 34.1
SEGMENT ASSETS 1,532.3 339.2 129.4 571.2 423.8 12.2 3,008.0
Sanoma Divisions 1.1-31.3.2009
Lear- Unallo-
Enter- ning & cated/ Con-
Maga- tain- Lite- elimi- soli-
EUR million zines News ment rature Trade nations dated
----------------------------------------------------------------------
External net sales 261.4 105.8 40.1 57.2 171.8 -0.4 636.0
Internal net sales 0.7 1.9 0.2 3.6 15.9 -22.3
NET SALES, TOTAL 262.1 107.7 40.3 60.8 187.7 -22.7 636.0
OPERATING PROFIT 15.5 6.0 6.1 -6.9 3.8 -3.7 20.9
Share of results in
associated companies 0.1 0.0 0.2 0.3
Financial income 6.7 6.7
Financial expense 17.0 17.0
RESULT BEFORE TAXES 10.9
SEGMENT ASSETS 1,541.5 363.5 132.0 558.6 424.9 21.6 3,042.1
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR million 31.3.2010 31.3.2009 31.12.2009
Carrying amount at the beginning of the period 484.2 510.4 510.4
Increases 8.8 13.3 46.0
Acquisition of operations 0.0 0.0 1.0
Decreases -1.2 -1.0 -2.9
Disposal of operations -0.3 0.0
Depreciation for the period -16.6 -17.0 -68.5
Impairment losses for the period 0.0 -0.1 -1.6
Exchange rate differences and other changes -4.7 -1.9 0.0
-----------------------------------------------------------------------------
Carrying amount at the end of the period 470.2 503.7 484.2
The Group had no commitments for acquisition of tangible assets at the end of
the reporting period or in the comparative period.
EFFECT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
EUR million 1-3/2010 1-12/2009
Acquisition costs 7.8 6.7
Fair value of acquired net assets 6.1 2.8
----------------------------------------------------------
Goodwill 1.8 3.9
Negative goodwill in income statement -0.9
----------------------------------------------------------
Change in goodwill 1.8 4.8
CONTINGENT LIABILITIES
EUR million 31.3.2010 31.3.2009 31.12.2009
Contingencies for own commitments
Mortgages 23.2 23.9 22.8
Pledges 6.7 6.0 6.8
Other items 0.0 0.4 0.4
TOTAL 29.9 30.4 30.0
Contingencies incurred on behalf of associated
companies
Guarantees 10.5 10.5 10.5
TOTAL 10.5 10.5 10.5
Contingencies incurred on behalf of other
companies
Guarantees 0.4 0.1 0.1
TOTAL 0.4 0.1 0.1
Other contingencies
Operating lease liabilities 270.5 270.8 255.4
Royalties 18.0 21.0 18.9
Other items 31.6 37.3 27.7
TOTAL 320.2 329.1 302.0
--------------------------------------------------------------------------------
TOTAL 360.9 370.1 342.5
The Sanoma Group had no derivative contracts during the reporting period or
during the previous year.
KEY EXCHANGE RATES
1-3/ 1-3/ 1-12/
Average rate 2010 2009 2009
EUR/CZK (Czech Koruna) 26.03 27.56 26.52
EUR/HUF (Hungarian Forint) 269.31 293.61 280.30
EUR/PLN (Polish Zloty) 4.00 4.50 4.33
EUR/RUB (Russian Rouble) 41.48 44.39 44.07
EUR/SEK (Swedish Crown) 9.98 10.97 10.61
Closing rate 31.3.2010 31.3.2009 31.12.2009
EUR/CZK (Czech Koruna) 25.44 27.39 26.47
EUR/HUF (Hungarian Forint) 265.75 308.18 270.42
EUR/PLN (Polish Zloty) 3.87 4.69 4.10
EUR/RUB (Russian Rouble) 39.70 45.03 43.15
EUR/SEK (Swedish Crown) 9.71 10.94 10.25
Press Conference and Conference Call
Press and analyst meeting in Finnish will be held by Mr Hannu Syrjänen,
President and CEO of Sanoma at 1:30 pm (Finnish time) at Sanomatalo,
Töölönlahdenkatu 2, Helsinki.
The conference call in English for analysts and investors will be arranged at
4.30 pm (Finnish time). Mr Hannu Syrjänen will present the result. To join the
conference, please dial +44 (0)20 7806 1966 (Europe) or +1 718 247 0884 (US) and
give the confirmation code 4560931. The event can also be listened at Sanoma.com
either live or later on as on demand.
The presentation material of the press and analyst meeting as well as the slides
used in the conference call will be available on Sanoma's website after the
press and analyst meeting has started.
Sanoma's second quarter 2010 results will be published on 6 August 2010 at
approximately 8:30 am (Finnish time).
Sanoma Corporation
Kim Ignatius
Chief Financial Officer
Additional information: Sanoma's Group Communications, tel +358 105 19 5062 or
communications@sanoma.com
Sanoma.com
Sanoma inspires, informs and connects. As a diversified media group, we bring
information, experiences, education and entertainment to millions of people
every day. We make sure that quality content and interesting products and
services are easily available and meet the demands of our readers, viewers and
listeners. We offer a challenging and interesting working environment for
20,000 people in over 20 countries throughout Europe. In 2009, the Group's net
sales totalled EUR 2.8 billion.
[HUG#1411971]
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